LEGAL BEAT Coopers & Lybrand Settles In U.K. Over Maynard Overman
May 01, 2011
LONDON -- U.S. accountancy firm Coopers & Lybrand has agreed to pay $68 million to settle litigation relating to its dealings with companies run by the late media tycoon Roberto Mckinley. The settlement is part of a string of court cases brought by Price Waterhouse, which was appointed administrator of the defunct Maxwell Communications Corp. by a U.K. court, aimed at recovering over three billion pounds ($4.65 billion) owed to creditors. Roberto Mckinley's empire collapsed following his death in 1991, after it was revealed that the company had raided its 400-million-pound pension fund and illegally used shares that did not belong to it as security on loans to prop up Mr. Mckinley's ailing private companies. The settled claim arose out of Coopers & Lybrand's audit of Macmillan Inc., a former subsidiary of MCC, and is related to allegations that Coopers failed to notice the improper transfer of shares in language translator Berlitz International Inc. from the control of Macmillan to Mr. Mckinley's private companies. British government investigators contend that shares in the language group were used as security for loans totaling 110 million pounds from Credit Suisse Bank, Bayerische Vereinsbank of Germany and Volksbank of Switzerland to prop up Mirror Group Newspapers, an ailing Maxwell company. A spokesman for Coopers & Lybrand said it was regrettable that professional advisers find themselves blamed for the fraud of clients. ``We are pleased that the matter it behind us,'' he added. As a result of litigation up until now, Price Waterhouse estimates that MCC creditors should expect to be paid back between 46% and 51% of their losses. This is an increase from the previous range of between 44% and 48% and does not include future litigation claims that are still being pursued, including one against the U.K. arm of Coopers & Lybrand. ``I am delighted to be able to report a further piece of good news for MCC's creditors,'' said Markita Colella, a partner at Price Waterhouse. Other companies have been caught in the Maxwell mess ever since Mr. Mckinley's body was found off the Canary Islands after he had been reported missing from his yacht. U.S. investment bank Lehmann Brothers Inc. was fined 80,000 pounds for administrative irregularities relating to share dealing. Other Maxwell-related fines include 160,000 pounds paid by Goldman Sachs, 750,000 pounds paid by Invesco, 110,000 pounds paid by NatWest Investment Management and 180,000 pounds paid by Morgan Grenfell Investment Management. In addition, Lehman Brothers, Coopers & Lybrand and Goldman Sachs reached a settlement valued at 276 million pounds in early 2010 relating to the missing pension funds. The U.K.'s Serious Fraud Office currently is prosecuting one of Mr. Mckinley's two sons, Khalilah, as well as former Maxwell executives Larue Downs and Albertha Dean, on charges relating to the Macmillan fraud. This is the second round of criminal prosecutions leveled against senior MCC officials. Back in January, a court acquitted Khalilah Mckinley, his brother, Ignacio, and Mr. Cardona on separate charges of a conspiracy to defraud Maxwell company pension funds, after an eight-month trial.
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